Sagging Floors, do I run?

Question

Hello Biggerpockets,

I am a new investor in New Jersey and am looking to Househack my first property. After a year and a half of searching in this crazy market, I finally got a deal where the numbers made sense in this market! My offer was accepted.  It is a two-family home that was built in 1926.

5% down / Purchase price $361,000

I had my inspection and had the contractor who would do the repairs also take a look at the property at the same time. During the inspection, they noticed Sagging Floors on the first and second floors, not in the attic space. The sagging went towards the middle of the house which made both of them assume that something in regards to the house support was off. However, when we went into the basement the main beam was not visible for us to be able to tell. Making it hard for us to know what exactly was the problem. The sagging is extremely noticeable for the experts, Probably sagging about three inches. After further review, it appears the sagging was going in multiple directions not just to the center of the home. The contractor advised that this is definitely concerning but is fixable but may be costly since we cannot find the source of this issue, while the inspector advised that it cannot be 100% fixed based on the age of the home as it may cause more damage.

My question is, is this something I should run from? As a first-time investor, I can only think the worse.

Darius Ogloza · Answer

I can't recall the last time I bought a property without sagging floors.  Just saying.

I can't give specific advice without seeing the property first hand but consider the fact that the house has been standing since Calvin Coolidge was President.

Joel Miller · Answer

@Tiago N Dos Santos

The last flip I did was built in 1925 and it had crazy bowed floors. Cost me 6k to run all new joists along the old original joists and we jacked the whole house up with bottle jacks in strategic locations. How loud it creaks when you start straightening a house up 3 inches is a little frightening lol. If your numbers make sense definitely go for it! Also, it depends on what kind of foundation you have as to how much it costs because of the ease of access. I only had 12-18 inches of crawl space on mine so that was pretty difficult and claustrophobic. Best of luck!

Caleb Brown · Answer

It is very common for older properties to have sagging or settling. BUT being said get an engineer out there. Verify the structure is solid. Is it a stone/rock foundation? What I usually see with older homes is the main beam needs supported or replaced if it hasn't been done in awhile. Due to wood rot or just it being old. Factor that in to the cost and negotiate. Beam work isn't crazy expensive. Don't assume, get experts out there and go from there.

Alecia Loveless · Answer

@Tiago N Dos Santos I bought a property with sloping floors. It was originally listed at $175,000 and the original buyers were told it needed to be jacked up and have a new foundation put in for $75,000 to correct the problem. They backed out. The price dropped to $145,000. The second buyers were told it needed a new foundation for $75,000 and backed out.

I got my own foundation expert to crawl into the crawl space, it’s a post and beam foundation, and my expert said that since we have such cold winters the ground had been shifting beneath the building. He said the foundation was solid and he’d recommend spray foam insulation, and a modine heater to keep the crawl space heater around 34 degrees in the winter and not worry about the sloping floors. Cost for this $7,000.

I bought the building for $109,000 because “it needed a $75,000 foundation” and spent $7,000.

Jaron Walling · Answer

@Tiago N Dos Santos If this is your first property I'd cancel the contract (inspection contingency) and walk away. Structural issues are not fun and without the skills or contractor support to fix it buying this deal comes with risk. If you have cracks on the walls/ceiling/floors it's not a good sign. I remodeled my current primary and it had settling cracks but the home was built in 1928 and it wasn't major. Every situation is different and sometimes "if it ain't broke, don't fix it" works out just fine. 3'' sag on flooring is more than I've seen on properties. As an investor that buys distressed properties I'd still pass on it. You have to consider the possible repair and being comfortable with the expense.

Not only that the real estate market(s) are over-heated. I just read an article about property prices in Sydney Australia going up over $20K per month. I'd be cautious about deals like this with a possible market correction over the horizon.

Karl B. · Answer

Factor the cost of the repair into the purchase price - are you OK with paying that amount?

Plus you stated it's not a 100% fix. Are you OK with that? You can also get a 2nd opinion from someone who specializes in such a matter.

I'm not giving a yes or no answer as this is your decision but I do want to say don't let a hot market push you into buying a property you may regret buying.

Tiago N Dos Santos · Answer

Thank you all for your inputs. This is definitely stressful. I will be meeting with the Contractor (who is also my dad) and talk numbers out on repairs to get an idea. From what I have seen in the worst-case scenario the number would not play out and I would have to pull from the deal. Since this is my first property I do not want to have a big project on my hands and turns out this might just be that as this was the big issue but there is also a lot including water damage in the home. There are cracks in the Walls and Ceillings as well from the sagging. I will probably get an engineer out there to take a look and provide more details. Thank you all again for the advice.

Matt Groth · Answer

@Tiago N Dos Santos get numbers put together for the work, and adjust your offer based on that. Let the seller walk away. If it can be fixed, and the arv makes sense, go for it. In markets like this, the deals are never turnkey

Rodney Sums · Answer

@Tiago N Dos Santos

I'll make a point that is validated by an example given to you by @Alecia Loveless

Having a huge project can be a benefit to you as well as a detriment.  Suppose it is a structural issue and a qualified inspector can verify that for you within your inspection period.  The seller will have to either fix it, negotiate a reduced price and then you do it yourself, offer a seller credit to fund the fix, have the knowledge of a foundation issue making the property harder to sell because now they have to disclose knowledge of the defect to other buyers (and possibly the lender) after you, or sell the property AS-IS and risk losing value.  Keep in mind your local laws and market influence what I mentioned.  The benefit for you is if you negotiate correctly with respect to the cost of the fix, it can help you get a better deal on the property taking on the inconvenience of fixing the place.  The detriment is not finding out until after you close and being stuck with a property you paid market value for that needs a major repair.  Hopefully the bowed floors aren't major.

Shawn Mcenteer · Answer

@Tiago N Dos Santos  this is a very tough for anyone to give an answer on without seeing the problem.  My first house hack in NJ had sagging floors I identified it from the start, confirmed structurally all was well.  The problem end up being fixed by shimming the floor which wasn't cheap even doing it myself.  You spoke to a contractor that thinks it is a concern, what does he think the cost to fix will be?

Sagging Floors, do I run?

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